Todays Trade Ideas 08.25.2017 – USDJPY, AUDCHF

The euro came within a few pips of hitting a new 10 day high versus the U.S. dollar this morning and while the dollar is up versus the Yen, its weakness against other currencies is a sign of how investors feel going into Janet Yellen’s speech at Jackson Hole this morning. She is widely expected to suggest that balance sheet normalization needs to happen but investors are worried that she won’t provide much more. We know that the Fed’s leadership which includes Yellen, Fischer and Dudley still believe that rates could rise before the end of the year (particularly Dudley who said so earlier this month) but its unclear whether Yellen will address that today’s speech. Draghi on the other hand is likely to stay tight lipped but the euro seems to be the biggest beneficiary of the market’s expectations for Yellen disappointment. This morning’s German IFO report was mixed with the business climate index falling and the expectations index rising. The rest of the other major currencies including sterling is trading higher versus the greenback and this weakness has allowed USD/CAD to knock on 1.25’s door.